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Ont. posts $6.4 billion deficit for 08/09

<p>TORONTO - The recession caused a massive drop in Ontario governmenttax revenues, sending the province's deficit for 2008-09 soaring to$6.4 billion.</p>

TORONTO - The global recession caused a massive drop in Ontario
government tax revenues last year, sending the province's deficit for
2008-09 soaring to $6.4 billion, the Ministry of Finance reported
Friday.

The Liberal government originally predicted its books
would be balanced when it tabled its 2008 budget, which included an
$800-million contingency fund and a boast that “there was no danger” of
falling into deficit.

However, once the recession really took
hold, Ontario revised its budget projections last fall to forecast a
$500-million deficit, and again last spring to predict a shortfall of
$3.9 billion for 2008-09, but even that proved too optimistic.

Public
accounts released Friday showed corporate tax revenues fell 48.1 per
cent or $6.4 billion for the year ending March 31, 2009, the exact
amount of the budget shortfall for the year.

“Corporate taxes
are always very volatile, but none of us has ever seen anything like
this,” Finance Minister Dwight Duncan said Friday.

Overall
government revenues fell to $90.5 billion, while personal income tax
revenue was $24.7 billion, slightly below the budget forecast of $25.2
billion.

The global economic downturn led to a 0.5 per cent
contraction in Ontario's real gross domestic product in 2008, a weaker
than expected performance, said the Finance Ministry.

Even though the economy is starting to turn around, the corporate tax revenues won't bounce back immediately, warned Duncan.

“Government revenues will lag growth in the economy,” he said.

“But
now, as a government . . . we have to look at the expenditure side of
our income statement and we have to make some very difficult choices.”

The Liberals also projected a deficit of $18.5 billion for 2009-10 in the provincial budget introduced last spring.

That
figure too is expected to rise when Duncan delivers his fall economic
update late October or early November, but the finance minister
wouldn't confirm that Friday.

“I don't like to prejudge what we
will have,” said Duncan. “We don't have final numbers that are going
into the fall statement yet.”

Duncan also declined to say if the
government would stick to its plan to eliminate the deficit and return
to a balanced budget no later than 2015-16.

“I'll have more to say about that in the fall statement,” he said.

“We
initially took a much longer view of deficit elimination than the
federal government (but) they've had to adjust their dates now.”

“We absolutely responded in the appropriate fashion at the time,” he said.

Helping people who lost their jobs and eventually ended up on welfare also added to the province's red ink in the past year.

“The
expense for children's and social services increased by $256 million
from the budget plan, mainly because spending on social assistance and
other supports was higher in the downturn than budgeted,” said the
Finance Ministry.

The province's debt grew by $14.7 billion, which included some accounting practice changes, to $113.2 billion.

However,
the Liberal government said it was doing a good job in controlling
spending in a tough economic climate, keeping its spending per resident
on general government services at the second lowest among provincial
governments in 2008-09.

 
 
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